A lot has gone wrong in the UK housing market to create a crisis as bad as the one we’ve got. Our biggest problem though, is that local authorities don’t build enough anymore.
At Key Cities therefore, our answer is simple: councils should take the lead on solving the housing crisis. We are proposing an ambitious package of policy reforms – lifting restrictions so councils can borrow to finance building, more powers so councils can bring land into use, and revising central government funding formulas to reward councils which build with extra cash for public services.
Sajid Javid recently talked about borrowing more to build homes. The first thing he can do is lift the cap on the amount local authorities can borrow under the Housing Revenue Account, so councils can bring us up to 300,000 homes per year. Local authorities can then borrow what they need to build more homes and use the money from rents and sales of new homes to pay back their debts. Central government grants would be welcome to get building started – but in many cases, Whitehall wouldn’t need to borrow an extra penny.
To help councils plan more efficiently, the government should allow local authorities to reserve a certain amount of stock from being eligible for, and so guarantee that councils won’t lose any income from. Right to Buy sales. This will allow local authorities to preserve more social housing stock and get the income necessary to replace the homes which are sold.
Key Cities is also asking for the powers to take land which has planning permission, but construction has not commenced within a designated time, and use it to build houses ourselves. We also support strengthening compulsory purchase powers to get viable land into use, and further powers to get empty homes back into use, including through council tax. We’ve now got 1.4m empty homes in the UK, and even getting some of them back into use will relieve much of the immediate shortage and price pressure, particularly in the private rented sector.
In this endeavour, we are already working in partnership with the private and third sectors, and encouraging positive developments that promote quality housing and a mix of tenure. But local authorities must lead the process. We are the ones with a duty to provide local services, and we are the ones ultimately who have to make our cities good places to live.
Whitehall policy should take that into account. Central government funding formulas should reward councils which build more homes with extra funds for schools, hospitals and road improvements. In the end, we’ll only get homes built if the communities support them – and they’ll only support them if they know there will be a new GP surgery, or a new primary school, or a new junction to ease the traffic. And it’s no good to wait until the roads are gridlocked to act.
The Budget in November is an ideal opportunity for the government to set this right. All these powers are within their gift, and would jumpstart housebuilding immediately. This crisis is a generational challenge, and it’s time we found the guts to solve it.
Councillor John Merry is deputy city mayor of Salford, and housing lead for the Key Cities group of 21 cities.